STATEMENT FROM VINCENT DISALVO, CHIEF INVESTMENT OFFICER AT KINGBIRD INVESTMENT MANAGEMENT
With a path to lower rates now in sight, we are seeing a dramatic increase in sales listings. This signals that looming loan maturities are forcing many owners to test the market, hoping to capture any potential cap-rate compression ahead of refinancing deadlines. For many borrowers, refinancing will require a cash-in component simply to maintain their existing debt levels.
Years of higher rates have reduced loan proceeds by an estimated 20%, draining liquidity from the sector. This erosion has far outpaced the modest gains in rent and NOI growth, leaving owners squeezed between capital markets pressure and only incremental operating improvement.
For investors looking to enter the space, there has not been a more attractive entry point in the past two decades. Rescue capital strategies in particular can provide access to otherwise healthy assets where current ownership is struggling under their cost of debt. Longer-term, the fundamentals underpinning the multifamily sector remain intact.
We believe the market is now at its nadir. It is difficult to envision pricing deteriorating further, given the meaningful discounts available relative to replacement cost and new construction. For long-term capital, today’s environment presents a rare opportunity to acquire quality multifamily assets at historically compelling valuations.